With e-commerce shopping benefits, streaming video, cloud storage and "much more," Amazon Prime's integration with Whole Foods and the resulting ancillary benefits of Prime membership should make Whole Foods shoppers among the most loyal in the industry, Caporaso predicted.

Industry Impact

"This is the fist time major grocers, including Kroger, Walmart and Publix, will have to compete against a major technology company on their home turf," noted
IBISWorld analyst Jonathan Hadad.

"More than 224 million people are within one hour of a Whole Foods store, making grocery delivery much less expensive and more feasible," he pointed out. "Industry competitors must keep this in mind and begin to turn more focus to their delivery capabilities."

Grocery stores close to Whole Foods locations may need to adjust their prices to match any price cuts, Hadad said. Larger companies may be able to compete, but smaller ones will be "greatly impacted" because of lack of technological capability and inadequate funds.

However, they need to be able to leverage that data to build their own high-quality private label brands, he told the E-Commerce Times.

They also have to figure out how to respond to Amazon's grocery delivery options already in place, Thomson noted.

Walmart
has tied up with Google to allow consumers to place orders through Google Assistant or the Google Express website or app.

That "helps Walmart with localized shopping and search data, but doesn't resolve the customer delivery problem or the overall inventory management problem of how to offer a huge selection locally for pickup and, perhaps, delivery," Thomson remarked.

Still, Whole Foods represents "only 3 percent of the market," IBISWorld's Hadad said, adding that the organic market is only 5 percent of the entire grocery market, according to the Organic Trade Association.

The grocery industry is worth more than $610 billion a year, Hadad pointed out, and Walmart "is the nation's No. 1 seller of groceries, including perishable products."

Price Is Key

"Price is a huge consideration in grocery shopping," Hadad said. "A Nielsen study found 72 percent of North Americans would switch stores if they found a better price elsewhere."

Lower prices could increase sales volume at Whole Foods, assuming they become the norm and aren't just a promotional gambit, he suggested. However, "Amazon and Whole Foods must work on messaging and ensure people who don't usually shop at Whole Foods know of price decreases."

Richard Adhikari has been an ECT News Network reporter since 2008. His areas of focus include cybersecurity, mobile technologies, CRM, databases, software development, mainframe and mid-range computing, and application development. He has written and edited for numerous publications, including Information Week and Computerworld. He is the author of two books on client/server technology.
Email Richard.